Use your child - best child savings account

xylophone

So is it £26,400 for a couple with 2 children?

No - see full link cited in post 582 above (http://www.candidmoney.com/questions/question226.aspx) which gives an example for two children.
See also the second link http://www.northernrock.co.uk/savings/learn/childrens-accounts/

ejv

OK.So its £6600 per couple, regardless of the number of children???

From MSE:
""Just to clarify, this doesn't mean £6,600 every year; it's the interest generated from all cash given in this and previous years"".

So does this mean that a child can accrue only £100 interest till 18.If you invested £6600 @3% this tax year, is that the end of deposits for a child?

Froggitt

No, at 3% interest, its around £3,000 per parent per child.

And yes, a child can only accrue £100 per annum from money given by a parent.

But, AFAIK, Junior ISAs are exempt from this rule, and you can stuff £3,600 each year for each child.

mbailey

Froggitt wrote: »

No, at 3% interest, its around £3,000 per parent per child.

And yes, a child can only accrue £100 per annum from money given by a parent.

But, AFAIK, Junior ISAs are exempt from this rule, and you can stuff £3,600 each year for each child.

The problem with Junior ISA's is that there is a large group of children which are not allowed to have them. Anyone born between 1 Sept 2002 & 2 Jan 2011 can't get one.

Just done a quick calculation regarding compound interest, the maximum you can give a child each year (assume you give the same amount each year for 18 years and interest rate of 3%) is £285 per couple per child per year.

When it is first written as around £6000 then it doesn't sound like it would be a problem for many people, but if you take regular savings into account for only £24 a month, then it is a big problem.

I really hope the government just allow anyone with a Child Trust Fund to move them into a Junior ISA.

mbailey

xylophone wrote: »

Presumably having given the above information, they expect the parent to work it out for himself?

But the problem here is still what happens if you have an account which has for example a balance of £20000 of which £6000 is from a parent and £14000 is from other people.

As I read the information from Northern Rock the account can no longer be declared as tax exempt, so the whole balance of £20000 would be taxed.

There is no guidance from what I can see that you should ring fence money from parents in one account and money from everyone else in another account.

You could look at it from the view it is not with in HMRC's interest to point this out, as they want to maximise the income they will receive, but you would think it would be in the banks interest to point it out to their customers.

xylophone

There is no guidance from what I can see that you should ring fence money from parents in one account and money from everyone else in another account.

You don't absolutely have to separate the amounts but it makes life much easier if you do from the point of view of administering the
account.
See http://www.hmrc.gov.uk/tdsi/children.htm
http://www.hmrc.gov.uk/tdsi/example5.htm

The problem with Junior ISA's is that there is a large group of children which are not allowed to have them. Anyone born between 1 Sept 2002 & 2 Jan 2011 can't get one.

This is so but the amount that can be invested in a CTF is the same as can be invested in the JISA.http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ChildBenefitandChildTrustFund/ChildTrustFund/AnintroductiontotheChildTrustFund/DG_193690
"From 1 November 2011 parents, family and friends can add money to the account up to a limit of £3,600 a year."

ejv

mbailey wrote: »

Just done a quick calculation regarding compound interest, the maximum you can give a child each year (assume you give the same amount each year for 18 years and interest rate of 3%) is £285 per couple per child per year

Thanks.This is what I thought,but couldn't figure out because of my poor maths.
No wonder this has not become a big discussion in MSE forum.

mbailey

xylophone wrote: »

This is so but the amount that can be invested in a CTF is the same as can be invested in the JISA.http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ChildBenefitandChildTrustFund/ChildTrustFund/AnintroductiontotheChildTrustFund/DG_193690
"From 1 November 2011 parents, family and friends can add money to the account up to a limit of £3,600 a year."

Yes but the annoying problem already is that there are better rates out there for Junior ISA's than there are for Child Trust funds.

http://www.moneysavingexpert.com/savings/child-trust-fund-vouchers
and
http://www.moneysavingexpert.com/savings/junior-isa

You can just about get a 3% with a child trust fund but that only includes a 1year bonus, so will need to move the money in a years time. Junior ISA's are already offering 3.25%.

Also the number of providers offering child trust funds is alot less and will not doubt reduce further.

Hence my point I hope the government go back on the decision they made earlier and allow child trust funds to be moved into Junior ISA's.

xylophone

Yes but the annoying problem already is that there are better rates out there for Junior ISA's than there are for Child Trust funds.

Yes - if parents are stuck with the CTF it might be better to give up the cash saving option and go for the stock market in the hope of a better return - perhaps a monthly investment into the F&C offering might suit. http://www.fandc.com//new/it/?id=78397&PageId=3.3.4&source=fnetsearch&locale=UK

Froggitt

mbailey wrote: »

The problem with Junior ISA's is that there is a large group of children which are not allowed to have them. Anyone born between 1 Sept 2002 & 2 Jan 2011 can't get one.

But havent those kids already had gifts of free money from the government, plus a tax free haven?